An extremist, not a fanatic

January 14, 2008

Subrational decision-making

Gordon Brown's support for the idea of "presumed consent" in organ donation raises a big issue. I don't mean the specific principle of who owns our organs, but rather that our decisions can be coloured by sub-rational factors.The thing is, in principle, it shouldn't matter whether we opt in or opt out of organ donation. Under Brown's proposal, anyone who doesn't want to donate organs can choose not to, just as now. So why the fuss? It's because the way in which choices are presented to us can affect what we choose - a fact which is awkward for conventional conceptions of rationality. I reckon there are at least 8 ways in which this can happen.1. Inertia. This is the principle Brown is exploiting. People don't always make decisions, but merely carry on as usual. In our current system, this means they are not organ donors, as becoming a donor requires an active choice. Under the "presumed consent" system, non-donation will require an active choice. That means the non-decision makers will become donors.It is for this reason that Halifax is driving us mad with its adverts for its high-interest current account. It knows that we don't make decisions about our bank account, but merely stick with what we've got. To overcome this inertia, it's got a lot of work to do.2. Status quo bias. A related tendency is to stick with what we've got - the devil we know. For this reason, a good way to get things done in large organizations is to do it, and then seek approval - because the action then becomes the status quo.3. The endowment effect. People value what they have simply by virtue of having it. It's for this reason (and perhaps 1 and 2 as well) that companies offer zero interest for the first six months on credit cards, or cheap broadband. They figure that after the introductory deal has run out, people will stick with their products, even though they aren't such a good deal.4. Availability. We choose what's obvious to us, rather than seek out more obscure but better alternatives. Advertising plays to this principle. It is also why supermarkets place their higher-margin products at eye-level.5. The choice set matters. Richard Thaler and Shlomo Benartzi have shown (pdf) that when people are offered choices to invest their pensions in lots of equity funds and few bond funds, they put more into equities than they do if they are offered lots of bond funds and few equity funds. Even for intelligent people making big-money decisions, therefore, the set from which we are choosing influences our choice more than it should.6. Framing. Every pedant fumes when furniture shops offer us a "50% saving". What the shops know, though, is that people are attracted more by getting a positive gain than they are by foregoing a loss.7. Informationcascades. Advertisers - especially of beauty products for some curious reason - sometimes point out that theirs is a best-selling item. This appeals to the principle that we are more likely to choose something if we believe others have done so.8. Halo effect. The popularity of the iPhone rests in part upon the success of the iPod; people figured that if Apple could produce one great thing, they could produce others. Car-makers even make halo vehicles, which are intended to attract buyers to other cars in their range. You might think all this is well known. But I'm not sure its implications are sufficiently appreciated. It's not just retailers who use such sub-rational methods to get us to buy their products. So too do politicans. Which raises the question. Would a government that owes its election to such techniques be entirely legitimate?

"Would a government that owes its election to such techniques be entirely legitimate?"

What, as opposed to a government that owes its election to all the old dirty political tricks that were used before this list of biases was discovered? I imagine any actually existing government owes its position in power to more worrying shortcomings than its ability to frame the issues etc.

So what do you think about the implications of these biases for policy? Faced, say, with the option of destroying 50 jobs and creating 100 new ones, should we decline because the endowment effects means the loss will hurt those it affects more than the job creation will? Or should we say that in the long run net job creation is more important and should take priority these contemporaneous psychological costs? Hard to say: there's not much more to life than contemporaneous psychology.

I'm sorry, the first part of my comment was badly put. I meant that because any realistic democratic process is likely to involve these sub-rational decision making elements, then unless we want to call all democracies illegitimate, we can't use them (absence thereof) as criteria for legitimacy.

Actually, the issue for me isn't about decision making, nor is is about ownership; it's about how we behave in a civilised society. If I have something that you want, I expect you to ask me politely if you can have it - I don't expect you to presume that I consent.

It might seem a small, picky point, but presumed consent, without explicitly obtaining it, is tantamount to theft. It certainly is not civilised behaviour.

Why exactly is this debate going on at all? Spare organs are a scarce resource and we already know the best way to distribute a scarce resource in the most efficient way possible, establish property rights and a market. Centralised rationing is not the way to go even if opt in.

".. first mistake of and organ being removed - pretty unlikely in the event the organ is removed from someone certified dead": the mistake will prove to be that there was no need to give up hope on the now-cadaver surviving.